Dogs of War: Employees, what employees?

WASHINGTON, March 14 (UPI) -- Articles about private military or security contractors have a depressing tendency to be formulaic. They are predictably mistrustful of business, suspicious of people carrying guns and disdainful of what is, for all practical purposes, a blue-collar profession.

Consider for example the frequently cited belief that private security contractors are unsupervised, out-of-control gunslingers who act with impunity. This was particularly in vogue after the killing of Iraqi civilians and police in Baghdad by Blackwater contractors last September.

If nothing else, that incident provided a great deal of evidence to suggest that the reality is, to say the least, more nuanced. Industry sources were able to show anyone who was interested the numerous rules, regulations, in-house codes of conduct, military rules of engagement, and national and international laws they operate under. Admittedly, the incident also suggested that these are honored as much in the breach as in the observance, and that there is much room for improvement.

Still, the industry is hardly without the means of controlling those who work for it.

But all that is offset by the memorandum released earlier this week by House Committee on Oversight and Government Reform Chairman Henry A. Waxman, D-Calif.

Waxman has developed a reputation as a bete noire of Blackwater, having held multiple hearings on the firm in the past year or so. Some of his criticisms have been correct, others have been debatable. But the memo's charges -- or more exactly the response to them -- go to the heart of the control issue, although, ironically, they probably won't be recognized as such.

Waxman sent letters to the Internal Revenue Service, the Small Business Administration and the Department of Labor to request investigations into whether Blackwater has violated federal tax, small business and labor laws. He wrote that last year his committee had obtained evidence indicating that Blackwater may have improperly designated its security guards as independent contractors rather than employees in order to avoid paying and withholding federal taxes. The committee estimates that Blackwater failed to pay or withhold up to $50 million under its contract with the State Department alone. That in itself is old news, having been reported last October.

But Waxman alleged further violations. For example, despite the fact that Blackwater is one of the largest U.S. private security contractors and has received nearly $1.25 billion in federal contracts since 2000, the firm has sought and received special preferences, known as set-asides, intended for small businesses -- because Blackwater says that its security guards are not employees for the purpose of counting the company's total number of staff.

As a result, the company was able to obtain small business set-aside contracts without having to compete with other qualified bidders that properly designated their guards as employees. Waxman's committee staff members have identified at least 100 small-business set-aside contracts worth more than $144 million that have been awarded to Blackwater since 2000.

Some might think this is par for the course. People and businesses try to minimize their taxes, and take advantage of government regulations in other ways, all the time. They might declare, like Claude Rains in Casablanca, that they are "shocked, shocked to find that gambling is going on" in Rick's Cafe.

But that would miss the point because what really makes one's jaw drop is to read Blackwater's defense. According to the memo:

"In all three instances, Blackwater has asserted … that its security guards are independent contractors because the company does not exercise sufficient control over their activities in Iraq and Afghanistan. Blackwater has claimed in official communications that its security guards are 'in no way directly supervised or controlled by Blackwater'; that they 'do not report to any of the Blackwater entities regarding their work in the field'; and that they 'do not report to Blackwater regarding their operations in country.' Blackwater has also claimed that it 'plays no role in the development or planning of the contractors' security missions' and 'has little if any knowledge regarding the location or activities of these independent contractors.' According to Blackwater, its 'only real involvement is to pay the independent contractors.'"

Huh? Congratulations Blackwater. In just one paragraph you have seemingly confirmed every self-appointed critic's worst fears -- that the average security contractor is independent in the worst possible sense of the word, i.e., unsupervised and uncontrolled.

Of course, Blackwater's defense is laughable, if for no other reason than the fact that it is contradicted by the public record. We know, for example, as a result of the investigation into the killing of the four Blackwater contractors in Fallujah in 2004 that Blackwater was intensely involved in "development or planning of the contractor's security missions or the directions on implementing them."

It was Blackwater management, not the State Department, that reduced the preparation time for the ill-fated security detail so that they were dropped in place on their first day on the job.

As Robert Pelton, author of the well-received book "Licensed To Kill," noted, State Department operational procedures require at least 24 hours notice for a move, which is supposed to be used for advance prep work such as scouting the intended route, generating alternate route plans, evacuation instructions, and putting together a detailed briefing for the security contractors.

It was Blackwater management that decided to send out a four-man detail, instead of the usual six. It was Blackwater that decided to send the detail in soft-skinned instead of armored vehicles. It was Blackwater that decided not to give the detail machine guns as required by contract.

Such actions starkly contradict the claim made by Blackwater President Gary Jackson, who in an October 2006 affidavit wrote, "After being deployed, Blackwater has little if any knowledge regarding the location or activities of these independent contractors. Blackwater's only real involvement is to pay the independent contractors."

That, as my Yiddish speaking grandmother would have said, is real chutzpah.

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